Sunday, March 1, 2015

Coal trends on the Ohio River


That was the first word out of my mouth when I compared coal shipments through Ohio River locks in 2014 with 2013 and the recent peak in 2015. I expected locks in the mid Ohio Valley to see declines and those in the Louisville District to see increases, but not to this extent.

First, the numbers. I added the monthly totals on the Corps Reports website and compared them with final numbers for 2013 issued last month by the Corps of Engineers. I chose 2005 as a comparison year also because it seemed to be the recent high point for coal shipments here in the Huntington District.

All amounts are in thousands of tons.

Locks 2014 2013 2005
Emsworth    14,605.6    15,390.6    16,828.2
Dashields    14,957.5    15,455.8    16,846.7
Montgomery    14,889.6    15,337.8    17,430.4
New Cumb.    20,571.1    22,141.5    25,487.8
Pike Island    20,335.8    22,103.3    29,112.9
Hannibal    29,731.8    27,439.0    40,686.3
Willow Island    26,366.5    24,936.4    36,996.8
Belleville    27,784.7    26,013.7    38,045.4
Racine    28,946.6    26,516.7    38,200.8
RC Byrd    17,919.5    23,470.9    42,051.5
Greenup    16,377.3    20,545.9    42,725.0
Meldahl    20,775.5    25,526.9    34,298.3
Markland    22,723.0    27,773.4    22,163.1
McAlpine    35,781.1    39,270.9    20,610.6
Cannelton    36,388.0    39,597.7    23,100.9
Newburgh    40,716.0    44,638.3    28,166.3
JT Myers    23,033.2    27,753.9    31,493.8
Smithland    24,895.8    30,381.8    35,528.7
L&D 52    21,414.6    27,740.1    30,110.4
L&D 53    11,607.3    19,326.9    19,516.0

Now, some background.

It's no secret that Appalachian coal production is down. There are geological reasons and environmental reasons. Here are some I listed in an article that was printed early last year in The State Journal:

The southern coal counties of West Virginia, along with eastern Kentucky and parts of Virginia and Tennessee, lie in what is known as the Central Appalachian region. Recent and long-term market conditions are working against an improvement in their fortunes.

The reasons for the pessimistic outlook for thermal coal include:

  • The low-hanging fruit has been picked. Seams are getting thinner and more expensive to mine.
  • The Clean Air Act amendments of 1990 helped Central Appalachia by forcing utilities to buy the region's low-sulfur coal to meet emissions standards. The amendments damaged the Illinois Basin coalfields, which produce high-sulfur coal, and also helped Powder River Basin coal. But with more power plants installing scrubbers, utilities can now switch to dirtier, cheaper coal from Illinois.
  • Meanwhile, the regulatory environment led utilities to accelerate their plans to retire older, smaller, coal-burning plants that are not large enough to justify the expense of scrubbers. Rather than being retired around the year 2020, many of these plants have been retired already or will be in about 15 months.
  • Because of conservation efforts and market conditions, the demand for electricity is less than it was a few years ago.
  • Meanwhile, the shale gas revolution has caused utilities to choose gas for new generating capacity. When gas prices are low, as they were in 2012, utilities turn to gas over coal when they can. That has changed some, and coal is regaining some market share.
  • And renewable resources such as wind are providing more power to the grid.

Compare Greenup with Cannelton, 2013 vs. 2005. It's almost as though the numbers have been reversed.

This explains a lot of why I see fewer boats on the Ohio here in the Huntington area than I did a few years ago.

There is other research I need to do as other numbers from 2014 become available. But these numbers are further evidence that Central Appalachian coal is losing market share to the Illinois Basin, the Powder River Basin and other sources.

© Jim Ross. All Rights Reserved.